Beijing Hits $4.5 Billion in Record Single Day Land Sales
Beijing scored US$4.5 billion in record land sales after easing controls to prop up property market, but analysts warn that the successful sale of the 12 sites in one day is no indication of a market recovery
Twelve out of 13 land sites were successfully auctioned off by the Beijing Municipal Commission of Planning and Natural Resources, earning a total of ￥31.6 billion ($4.55 billion) for the city government - the highest single day record in history.
One of the 12 sites was sold at a 49.3% premium over the starting price, with the remaining lots sold at a 0-26% premium, according to property agent Centaline Beijing. One site failed to draw any interest.
The results come after the city government allowed buyers, for the first time, to pay just one deposit to take part in bidding for all the sites. Authorities also lifted the requirement – for certain plots – in which developers must allocate at least 70% of the floor space for flats that are smaller than 90 square metres to ensure they build more affordable homes.
But analysts warned that the headline numbers should not be read as a sign of recovery, but more as a result of government efforts to prop up sales to send a positive message to the market.
The average premium for China’s residential land sold in October, according to the China Index Academy, fell to 6% from 27% a year ago.
At Monday’s auction, only three out of the 14 successful bidders were private developers including Greentown China Holdings and Guangzhou R&F Properties, while the rest were state-owned companies. Previously active players like China Vanke, China Evergrande and Sunac China Holdings were absent.
Analysts said the city government’s relaxation of curbs on developers helped in closing a number of the deals.
“The adjustments in the nature of the property developments and price caps have allowed for better profit prospects for buyers. The future selling prices will be higher, but the eligible buyer pool has also become bigger, so developers are more willing to take on the sites,” said Guo Yi, chief analyst at Beijing-based property marketing firm Heshuo.
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